Infineon Technologies expands Kulim plant to build world's largest silicon carbide wafer fab

At Infineon's third-quarter 2024 fiscal year earnings call held recently, one of the hottest topics discussed by Infineon Technologies CEO Jochen Hanebeck and analysts was silicon carbide and the Kulim plant.

"Our silicon carbide strategy takes into account all key elements: a globally diverse wafer and procurement network, best-in-class trench equipment, the most comprehensive packaging and modeling, excellent system understanding, cooperation with the broadest range of automotive, industrial and renewable energy customers, and a future-optimal cost-elastic manufacturing footprint that can be flexibly expanded according to actual market needs," said Jochen Hanebeck, CEO of Infineon Technologies. "These unique factors enable Infineon's power business, especially the silicon carbide business, to accelerate its success in the future."

Infineon Technologies and Malaysia

After attending the financial report meeting, Infineon Technologies CEO Jochen Hanebeck went to Kedah, Malaysia without stopping, where an important ceremony was waiting for him - the world's largest and most efficient 200mm silicon carbide power semiconductor wafer factory officially started production and operation.

The event was highly valued by the Malaysian government. The Prime Minister of Malaysia, the Chief Minister of Kedah and Infineon Technologies management attended the launch ceremony of the production operation of the first phase of the new wafer factory project.

As early as 1973, Infineon started its business operations in Malacca and entered the Malaysian market.

In 2006, Infineon opened Asia's first front-end wafer fab in Kulim. The plant was established to further expand Infineon's production capabilities in Asia, especially in the fields of power semiconductors and automotive electronics. In 2017, Kulim built a second plant. Malaysia is the only location outside the United States and Europe where Infineon conducts fully integrated manufacturing, which includes front-end and back-end, covering wafer manufacturing, semiconductor chip assembly and testing.

Today, with the hot demand for silicon carbide power semiconductors, its applications in electric vehicles, fast charging stations and trains, as well as renewable energy power systems and AI data centers are rising steadily. In order to meet the demand, Infineon announced in 2022 that it would invest 2 billion euros to build the third plant in Kulim, and in 2023 it continued to announce an additional investment of 5 billion euros for a major expansion, making it the world's largest 200 mm SiC (silicon carbide) power wafer factory.

The first phase of the new wafer fab project will create 900 high-value jobs, and the overall new wafer fab will create up to 4,000 jobs.

Jochen Hanebeck, CEO of Infineon Technologies, stressed that the construction of the first phase was completed several months ahead of schedule, which was inseparable from the joint efforts of local engineers in Germany and Malaysia. At the ribbon-cutting ceremony, since the ultra-clean room could not be visited, Infineon specially filmed a Fab Express documentary to introduce the advanced nature of Infineon's Kulim factory. Engineers introduced processes and equipment including polishing, ion implantation, etching, photolithography, annealing, etc.

“Today’s milestone is one of my most exciting moments to date,” said Jochen Hanebeck, CEO of Infineon Technologies, at the ribbon-cutting ceremony.

Malaysian Prime Minister Dato' Seri Anwar Ibrahim, Kedah Menteri Besar Dato' Seri Mohamad Sanusi and Infineon Technologies CEO Jochen Hanebeck and other distinguished guests attended the production and operation launch ceremony of Infineon's 200mm SiC power semiconductor wafer fab phase 1 project

Confidence in investing in silicon carbide

"We have made timely and decisive investments in wide bandgap semiconductors such as silicon carbide and gallium nitride. Our in-house manufacturing model clearly differentiates us from our competitors, and investments based on this conviction help expand our leading position," said Jochen Hanebeck, CEO of Infineon Technologies. "The new plant will enable us to serve a variety of markets that are expected to grow strongly in the long term. These include automotive, power generation and transmission to energy storage, and data centers."

Infineon Technologies CEO Jochen Hanebeck particularly emphasized the importance of energy saving in data centers. Today, data centers account for about 2% of global power consumption, and this figure will rise to 7% in 2030. Therefore, more efficient solutions based on silicon carbide, silicon or gallium nitride are needed. However, due to the limited space in servers, wide bandgap semiconductors will play an important role in the future data center energy saving market.

According to a previous press release, Infineon has received approximately 5 billion euros in new silicon carbide design orders and about 1 billion euros in advance payments from existing and new customers, including six vehicle manufacturers in the automotive field, three from China. Customers include Ford, SAIC and Chery. Customers in the renewable energy field include SolarEdge and China's three leading photovoltaic and energy storage system companies. In addition, Infineon and Schneider Electric have reached an agreement on capacity booking, including advance payments for silicon and silicon carbide products. "Several customers support the expansion of the Kulim plant through advance payments, which is a sign of high confidence in us. A large part of the orders were transferred to Infineon from other companies in the industry because Infineon's products and technologies are more superior and have strong supply flexibility." Infineon Technologies CEO Jochen Hanebeck emphasized.

In addition, Infineon also signed supply agreements with several epitaxial suppliers last year. All signs indicate that the entire market industry chain remains optimistic about silicon carbide.

It is worth mentioning that the third plant of Infineon's Julin plant will be closely connected to Infineon's production base in Villach, Austria, which is the global competence center of Infineon's power semiconductors. Infineon has increased the production capacity of silicon carbide and gallium nitride power semiconductors in the Villach plant in 2023. The two production bases are closely integrated, actually forming a "virtual collaborative factory" focusing on wide bandgap technology, which can share technology and processes, and thereby achieve rapid mass production and smooth and efficient operation. The project also has high elasticity and flexibility, and Infineon's customers will ultimately benefit.

"This investment, together with the planned 200 mm SiC conversions at the Villach and Kulim plants, is expected to bring annual SiC revenues to around 7 billion euros. This highly competitive production site will help Infineon achieve its goal of occupying a 30% global SiC market share by 2030. Infineon is confident that the company's goal of silicon carbide revenues of more than 1 billion euros in fiscal 2025 will be achieved," Infineon stated in a press release on the expansion of the Kulim plant in August 2023.

In a recent earnings conference, Infineon Technologies expects silicon carbide revenue to reach 600 million euros in fiscal 2024. "Obviously, we expect silicon carbide to grow next year as well. That's why we will expand silicon carbide production capacity in Kulim," said Jochen Hanebeck, CEO of Infineon Technologies, in a earnings conference call. "Kulim 3 will significantly enhance our competitive position in the field of silicon carbide."